DISPUTE RESOLUTION TRENDS: SPECIALTY TREATMENT OF ‘SMALL CLAIMS’

As the costs associated with legal disputes continue to rise around the globe, businesses are seeking options to defray legal costs and better ensure collection of claims. Arbitration has been a common option, often seen as lower cost; however, such costs are rising. Another option traditionally available for businesses facing smaller-value claims has been ‘small claims’ tracts within national courts.

Nevertheless, there is an ongoing and global disconnect between the judicial and institutional definition of ‘small claims’ and the reality facing most businesses. The institutional definition of ‘small claims’ varies around the world, with certain value claims eligible to receive expedited and low-cost treatment in national courts and arbitration institutes. Most national courts currently impose a cap on small claims close to $10,000. A number of arbitral institutions have also expedited procedures for small claims and tend to include higher value disputes as eligible for such treatment, yet parties must typically agree in advance to use of these procedures.

The timetable for a small claim usually moves faster than traditional claims, often including lower administrative fees, fewer court appearances and disclosure requirements, and elements of mediation or conciliation. Small claims may limit legal representatives, greatly reducing overall costs. Typically, small claims procedures will result in an enforceable order or judgment treated with the same authority as any other court order or arbitral award.